Place of removal doctrine allows input service credit on outward freight where title passes at the buyer's premises.

Under the amended Rule 2(l) of the Cenvat Credit Rules, 2004, outward transportation qualifies as input service only up to the place of removal. The place of removal must be determined with reference to Section 4 of the Central Excise Act, 1944 and the contractual passing of property under the Sale of Goods Act, 1930. Where the sale price is freight-inclusive and property in the goods passes at the buyer's premises, that premises may be treated as the place of removal. In such circumstances, transport to the buyer's premises forms part of clearance up to removal and service tax credit on outward freight is admissible.

---

---

Issues: Whether service tax paid on outward transportation of goods up to the buyer's premises was eligible as input service credit by treating the buyer's premises as the place of removal.

Analysis: For the period in dispute, the amended definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004 allowed credit on outward transportation only up to the place of removal. The place of removal had therefore to be determined with reference to Section 4 of the Central Excise Act, 1944 and the manner in which property in the goods passed under the Sale of Goods Act, 1930. On the purchase order and contractual terms, the sale price was freight-inclusive and the property in the goods passed only at the buyer's premises. The transportation therefore formed part of clearance up to the place of removal. The later CBEC clarification was also consistent with this approach.

Conclusion: The buyer's premises constituted the place of removal on the facts, and the outward transportation service qualified as input service. Credit was admissible and the denial was unsustainable.

---